Tractor Supply Company Reports Second Quarter Results

BRENTWOOD, Tenn., July 24, 2013 /PRNewswire/ -- Tractor Supply Company (NASDAQ: TSCO), the largest retail farm and ranch store chain in the United States, today announced financial results for its second fiscal quarter ended June 29, 2013.

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Second Quarter Results
Net sales increased 12.7% to $1.46 billion from $1.29 billion in the prior year's second quarter.  Same-store sales increased 7.2% compared to a 3.2% increase in the prior-year period.  The same-store sales increase was broad-based and driven by continued strong results in key consumable, usable and edible (C.U.E.) products and seasonal merchandise. 

Gross margin dollars increased to $506.1 million from $451.5 million in the prior year's second quarter.  As a percent of sales, gross margin decreased slightly to 34.8% from 34.9% in the prior year.  The decrease in gross margin as a percent of sales resulted primarily from the continued mix shift to lower-margin C.U.E. products, as well as increased transportation costs.  These decreases were partially offset by the favorable impact from key margin-enhancing initiatives.

Selling, general and administrative expenses, including depreciation and amortization, improved to 21.2% of sales compared to 21.8% of sales in the prior year's second quarter.  The improvement as a percent of sales was primarily attributable to strong same-store sales growth and expense control with respect to store operating costs, as well as lower year-over-year incentive compensation expense as a percent of sales.

Net income for the quarter was $123.6 million, or $1.75 per diluted share, compared to net income of $106.6 million, or $1.45 per diluted share, in the second quarter of the prior year. 

The Company opened 26 new stores in the second quarter of 2013 compared to 18 new store openings in the prior year's second quarter.

Greg Sandfort, President and Chief Executive Officer, stated, "We anticipated a late start to spring this year, and entered the second quarter well-positioned to take advantage of the seasonal shift.  As a result, we delivered a solid increase in store traffic, strong same-store sales growth across geographic regions and double-digit EPS growth.  Despite the seasonal change, our team managed the business effectively and continued to do a great job serving our customers, with C.U.E. categories posting solid increases in both sales and units and contributing to our 21^st consecutive quarter of year-over-year same-store transaction count increases."

First Six Months Results
Net sales increased 9.9% to $2.54 billion from $2.31 billion in the first six months of 2012. Same-store sales increased 4.2% compared to a 6.7% increase in the first six months of 2012. Gross margin dollars grew 9.4% to $858.2 million, or 33.8% of sales, compared to $784.3 million, or 33.9% of sales, in the first six months of 2012.

Selling, general and administrative expenses, including depreciation and amortization, were $592.3 million, an increase of 7.7%, but improved as a percent of sales to 23.4% compared to 23.8% for the first six months of 2012.

Net income was $167.6 million, or $2.37 per diluted share, compared to net income of $146.9 million, or $2.00 per diluted share, for the first six months of 2012.

The Company opened 48 new stores in the first six months of 2013 compared to 51 new store openings during the first six months of 2012.

Company Outlook
Net sales for the full-year 2013 are now expected to range between $5.10 billion and $5.17 billion compared to the Company's previously expected range of $5.07 billion to $5.17 billion. Same-store sales for the year are now expected to increase 4% to 5% compared to the prior expectation for an increase of 3% to 5%. Based on stronger than expected net income per diluted share for the first half of the year, the Company now anticipates net income per diluted share for the full-year 2013 will range between $4.36 and $4.44, compared to its previous guidance of $4.32 and $4.40. This projection includes estimated costs of $0.06 to $0.07 per diluted share associated with the relocation of the Company's Southeast distribution center and its corporate data center. 

Mr. Sandfort concluded, "Our performance in the first half of 2013 again demonstrated the continued strength of our core businesses, as well as our ability to manage through seasonal variances.  We place great rigor into better understanding and serving our customers' evolving needs, while seeking to introduce new customers to the Tractor Supply brand.  We believe our Company has a great opportunity ahead of us to grow the business, while continuing to deliver value to our shareholders."

Conference Call Information
Tractor Supply Company will be hosting a conference call at 5:00 p.m. Eastern Time today to discuss the quarterly results. The call will be broadcast simultaneously over the Internet on the Company's website at TractorSupply.com and can be accessed under the link "Investor Relations."  The webcast will be archived shortly after the conference call concludes and will be available through August 7, 2013.

About Tractor Supply Company
At June 29, 2013, Tractor Supply Company operated 1,223 stores in 46 states. The Company's stores are focused on supplying the lifestyle needs of recreational farmers and ranchers.  The Company also serves the maintenance needs of those who enjoy the rural lifestyle, as well as tradesmen and small businesses.  Stores are located in towns outlying major metropolitan markets and in rural communities.  The Company offers the following comprehensive selection of merchandise: (1) equine, pet and small animal products, including items necessary for their health, care, growth and containment; (2) hardware, truck, towing and tool products; (3) seasonal products, including lawn and garden items, power equipment, gifts and toys; (4) maintenance products for agricultural and rural use; and (5) work/recreational clothing and footwear.

Forward Looking Statements
As with any business, all phases of the Company's operations are subject to influences outside its control.  This information contains certain forward-looking statements, including statements regarding estimated results of operations, capital expenditures and new store openings in future periods.  These forward-looking statements are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to the finalization of the Company's quarterly financial and accounting procedures, and may be affected by certain risks and uncertainties, any one, or a combination, of which could materially affect the results of the Company's operations.  These factors include, without limitation, general economic conditions affecting consumer spending, the timing and acceptance of new products in the stores, the mix of goods sold, purchase price volatility (including inflationary and deflationary pressures), the ability to increase sales at existing stores, the ability to manage growth and identify suitable locations, the ability to manage expenses, the availability of favorable credit sources, capital market conditions in general, failure to open new stores in the manner and number currently contemplated, the impact of new stores on our business, competition, weather conditions, the seasonal nature of our business, effective merchandising initiatives and marketing emphasis, the ability to retain vendors, reliance on foreign suppliers, the ability to attract, train and retain qualified employees, product liability and other claims, changes in federal, state or local regulations, potential judgments, fines, legal fees and other costs, breach of privacy, ongoing and potential future legal or regulatory proceedings, management of our information systems, failure to secure or develop and implement new technologies, the failure of customer-facing technology systems, business disruption including from the implementation of supply chain technologies, effective tax rate changes and results of examination by taxing authorities, the ability to maintain an effective system of internal control over financial reporting and changes in accounting standards, assumptions and estimates.  Forward-looking statements made by or on behalf of the Company are based on knowledge of its business and the environment in which it operates, but because of the factors listed above, actual results could differ materially from those reflected by any forward-looking statements.  Consequently, all of the forward-looking statements made are qualified by these cautionary statements and those contained in the Company's Annual Report on Form 10-K and other filings with the Securities and Exchange Commission.  There can be no assurance that the results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequences to or effects on the Company or its business and operations.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.  The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

(Financial tables to follow)

^(a) Assumes average inventory cost, excluding inventory in transit.

SOURCE Tractor Supply Company